Government red tape killing mining sector, claims lobby

Unfavourable laws have stifled the growth of the mining industry, making the country lose billions of shillings in foreign exchange.

Kenya Chamber of Mines Chairman Charles Mwangi said investors in the minerals sector are fleeing Kenya to neighbouring states, a situation that should worry the Government.

He said the quantity of gold and gemstones, among other minerals, exported out of the country has been dropping in the last few years because of the stringent laws and red-tape introduced by the Mining ministry.

According to the official, the requirement that gold traders pay two per cent royalty to Government before exporting the commodities has led to illegal trade.

“Kenyan gold is being smuggled to Uganda for re-export because of the two per cent imposed royalty. Uganda is currently the largest exporter of gold in the region yet Kenya produces more,” said Mr Mwangi.

“Kenya loses billions of shillings through the smuggling of up to seven tonnes of its minerals to other countries each year because of the complex fiscal regime.”

Export value

According to statistics from the lobby group that represents interests of Kenya’s miners, exploration companies and mineral traders, the quantity of gold exported in 2018 was 472 kilogrammes, a drop from 503 kilogrammes in 2017.

The total value of the commodity exported in 2017 was $15,108,350.27 (Sh1.5 billion). Despite the drop in quantity, the gold exported out of Kenya in 2018 was worth $20,210,795.01 (Sh2.2 billion).

In 2017, Kenya exported 1.24 million kilogrammes of rough gemstones, which fell to 508.81 kilogrammes in 2018.

Yesterday, Mwangi blamed the drop in the number of exports of gemstones on the requirement that the Ministry of Mining officials take a picture of the stones as a prerequisite before issuing an export licence.

“There is no basis in the law on why Government officials should take pictures of the merchandise, it is not spelt anywhere in Mining Act, 2016,” he said.

The group cited another challenge as the condition that investors must obtain consent from the communities occupying the targeted land before being licensed to explore for and extract minerals.